IN THE HIGH COURT OF SOUTH AFRICA /ES (GAUTENG DIVISION ... ?· in the high court of south africa /es…
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IN THE HIGH COURT OF SOUTH AFRICA /ES
(GAUTENG DIVISION, PRETORIA)
DELETE WHICHEVER IS NOT APPLICABLE
(1) REPORTABLE: YES / NO
(2) OF INTEREST TO OTHER JUDGES: YES / NO
CASE NO: 22496/2013
IN THE MATTER BETWEEN
CFIT (PTY) LTD APPLICANT
THE MINISTER OF DEFENCE 1ST RESPONDENT
THE CENTRAL PROCUREMENT SERVICES
CENTRE: DEPARTMENT OF DEFENCE 2ND RESPONDENT
THE DEPARTMENTAL CENTRAL PROCUREMENT
BOARD: DEPARTMENT OF DEFENCE 3RD RESPONDENT
SPECSOFT SOFTWARE SOLUTIONS (PTY) LTD 4TH RESPONDENT
 The applicant applies for the reviewing and setting aside of the respondents' decision to
withdraw the tender issued under the Request for Proposal concerning the National
Codification System (BID CPSC/B/PC/013/2011R) ("the tender").
 Before me, Mr Vetten appeared for the applicant and Mr Motepe appeared for the 1st,
2nd and 3rd respondents. There was no appearance for the fourth respondent. The fourth
respondent also did not file any papers.
 The fourth respondent will be referred to as "Specsoft" and the respondents, as 1st to 3rd
respondents or as "no 1", "no 2" or "no 3".
 On 11 May 2012, the first respondent issued a Request for Proposals ("the RFP") in
relation to the provision of a codification system for implementation within the
Department of Defence, for a five year period ("the tender"). This is nothing new. The
existing codification system was already implemented in 1982.
 The closing date of the bid was 14 June 2012. It had a tender validity period of 120 days.
 There were four tenderers, but only the applicant and Specsoft had passed phase 1 of
the process involving compliance with mandatory criteria for tender submission.
 The applicant and Specsoft were then allowed to carry on with the tendering process
and the other tenderers were excluded.
 No 2 is a committee created within the Department of Defence responsible for
evaluation of the validity of tenders and for recommending to the third respondent the
most suitable service provider in respect of the relevant goods and services.
No 3 is a departmental Board within the Department of Defence responsible for
awarding tenders upon recommendations from no 2.
 No 2 unanimously and repeatedly (because no 3 kept on referring the matter back to
no 2 for further consideration) recommended that the tender be awarded to the applicant.
Broadly speaking, the applicant scored some 98 points and Specsoft only 35. The tender
price offered by the applicant was some R119 million compared to the R348 million
demanded by Specsoft. As to Broad Based Black Economic Empowerment ("BBBEE")
the applicant is a level 3 contributor and Specsoft a (lower) level 4 contributor.
 When no 3 persisted in its refusal to award the tender and kept on referring the matter
back to no 2, the applicant, through its attorneys, on 6 December 2012, placed the
respondents on terms to take a decision by 13 December 2012 failing which steps would
be taken in terms of the Promotion of Administrative Justice Act 3 of 2000 ("PAJA") to
force the respondents to make a decision.
This threat, clearly, did not make a favourable impression on no 3, which resolved, on
13 December 2014, to withdraw or "cancel" the tender.
The applicant's attorney was not informed of this withdrawal or cancellation and, on
28 February 2013, the applicant obtained an order from this court directing no 3 to make
a decision in relation to the award of the tender within 10 days of the service of that
It was only thereafter, in March 2013, that the applicant was informed of the
 The applicant contends that the cancellation was unlawful because it flies in the face of
the provisions of section 2 of the Preferential Procurement Policy Framework Act no 5
of 2000 ("the PPPFA") and also contravenes the regulations promulgated in terms of
that Act by Government Notice R510 of 8 June 2011. The applicant also contends that
the reasons advanced for the purported cancellation are spurious and without any merit.
 The applicant did not agree with the stance adopted by the respondents that it complied
with the order of 28 February 2013 by cancelling the tender. The applicant, initially,
asked for declaratory relief to the effect that the respondents are in contempt of that
order but later abandoned its quest for that relief.
 The respondents, in the Government Tender Bulletin, published another invitation to
bidders to tender for a similar codification system, but the applicant obtained
interdictory relief restraining the respondents from proceeding with a new tender
process pending the outcome of this case.
 There were some interlocutory skirmishes between the parties when the respondents
failed to timeously and comprehensively furnish the record of proceedings in terms of
the requirements of rule 53. The applicant also obtained an order from this court
compelling the respondents to file the record of their decision and reasons for the
decision in the evaluation and withdrawal of the tender within 10 days of service of this
order. On a general reading of the papers, the order was never, in my view, properly
complied with. Northing further turns on this. I will not dwell on the subject. The
record supplied enabled the applicant to file a supplementary affidavit in terms of rule
 This application was launched in April 2013.
 The relief now sought by the applicant, after abandoning the prayer for declaratory relief
flowing from the alleged contempt of the order of February 2013, and after amending
one of the prayers, now amounts to the following:
1. Reviewing and setting aside the first, second and/or third respondents' decision
to withdraw the tender issued under the relevant RFP (the terms "cancel" and
"withdraw" have been loosely applied by the parties and, for present purposes,
I regard them as having the same meaning).
2. Reviewing and setting aside the first, second and/or third respondents' refusal to
take a decision in the tender.
3. Substituting the first, second and/or third respondents' decision and awarding the
tender to the applicant. (There is an alternative prayer to refer the tender back
to a differently constituted evaluation committee for decision in accordance with
the tender specifications and evaluation procedures, but, before me, the applicant
pressed for the main relief of substituting the decision.)
4. Ordering the first respondent to pay the costs.
 So much for a brief synopsis of the case. I now turn to the relevant issues in more detail.
The tender process and some notes on the chronological sequence of events
 The RFP was for the "procurement of (a) ... Compliant Codification System with five
year Maintenance (contract)".
 The mandatory evaluation criteria involved four phases:
1. phase 1: compliance with mandatory criteria for tender submission;
2. phase 2: compliance with functionality, specification and scope of work
(a threshold of 70% was required to progress);
3. phase 3: price; and
4. phase 4: BBBEE.
 As mentioned, only the applicant and Specsoft passed phase 1.
 The applicant and Specsoft were invited to a Power Point presentation of their respective
bids to be held on 27 July 2012.
 On 2 August 2012 a minute of the Technical Evaluation Committee's deliberations was
produced. According to this, both the tenderers passed the 70% threshold. Members of
no 2, having evaluated the tenders, "concluded unanimously that CFIT was the cheapest
bidder and possessed international experience and expertise in accordance with NATO
standards. Accordingly CFIT was selected by the panel as the preferred bidder."
 On 6 August 2012 no 2 prepared a submission to no 3, recording all the details and
points scored (98 versus 35.74 in favour of the applicant) and the recommendation
stated: "13 ... the requirement at stake be awarded to Messrs CFIT (Pty) Ltd with the
highest points (98) and is in accordance with the specification".
 On 8 August 2012 no 3 met to consider the submission. The recommendation was not
accepted and the matter was referred back for four reasons which, in my view, have no
merit. The one deals with a calculation error of a minor nature which is irrelevant in
the greater context of the case and another one, which is also groundless, as will appear
later, reads as follows:
"(iii) On paragraph 5(b) of the Power Point verification report it is indicated
that 'CFIT project is based on the five year contract period as per bid
Terms of Reference (TOR). Specsoft pitched their project for a life cycle
of 20 to 25 years.' The Board concluded that, in terms of the period, the
bidders was not comparable and advised that the verification panel
should have asked Specsoft to shrink everything to five (5) years as per
the TOR ... asked Specsoft to break down their prices so that it could be
 On 21 August 2012 no 2 responded to the queries raised by no 3 on 8 August 2012
pointing out that the Technical Evaluation Process was followed by the evaluation
conducted through the Power Point presentation on 27 July 2012 where it was
established that both bidders had met the technical requirements. The process of
technical evaluation was described again by an item-by-item comparison between the
two tenders and this bid comparison demonstrated the manifest difference in the price
between the respective tenderers. As indicated, the applicant scored 98 out of a possible
100 points and Specsoft only 35.74 out of a total of 100 points. It was recorded that the
recommendation was made in accordance with the so-called 90/10 principle.
 Importantly, the recommendation that the contract be awarded to CFIT was repeated.
This was now the second identical recommendation.
 On 30 August 2012 no 3 met to discuss the minute. In terms of the minutes of their
discussion no 3 again declined to approve the recommendation. The main "objection",
such as it was, raised in the minute again had something to do with the "five year
argument" the contents of which I quoted above. No 3 complained that Specsoft "was
not afforded the opportunity to give a clear itemisation of costs and shrink everything
to five (5) years as per the last Board resolution on 8 August 2012". No 3 demanded
that the applicant "must be asked to demonstrate how their product will work on the
ground". There was an instruction that the two bidders should be called once again to
present to the verification panel and "this time Mat Gov should form part of that meeting
and sign off".
There was also a query about licence fees.
 On 6 September 2012 the applicant was invited to attend a second compulsory Power
Point presentation on 21 September 2012. Issues identified for reconfirmation included
that "the presentation must be strictly based on a five year contract period as per
approved TOR", and "clarity must be made on cost break down as per already submitted
quotation, especially on the once-off as well as licence renewal and system
 The applicant attended the second Power Point presentation on 21 September 2012 and
so did Specsoft.
 On 1 October 2012 no 2 produced minutes of the oral presentation carried out by the
two bidders on 21 September 2012.
In the minute, it is disclosed that the two bidders were re-invited to clarify the following:
"(a) presentation must strictly be based on a five (5) year contract period as
per approved Terms of Reference (TOR);
(b) clarity must be made on cost break down as per already submitted
quotation, especially on the once-off as well as licence renewal and
(c) demonstration of the system especially on deployment."
The minutes show that Mr Klein, on behalf of the applicant, "gave a well and
informative presentation including demonstration of how the codification system or tool
works especially on deployment. There were no questions asked in terms of the
Specsoft also confirmed that their bid price was for the five year contract. To this extent
it appears, and seems to be common cause between the parties, that the two bids were
"comparable". Unlike the conclusion by no 3, supra, on 8 August 2012, that "the
bidders was (sic) not comparable".
 Of particular interest, in my view, is the fact that the 21 September presentation by the
two bidders was attended by Mr P M Mokoena who is the Deputy Director of Materials
Governance ("Mat Gov"), also referred to as Materials Governance and Risk
Compliance or "Mat GRC". Mr Mokoena prepared a lengthy report on the presentation
which is dated 24 October 2012. I must assume that this report was prepared for the
attention of no 3. In the report, Mr Mokoena also identifies the three issues which had
to be clarified (quoted, supra, with reference to the minute by no 2) and in the report Mr
Mokoena, inter alia, states that -
"Mr Klein gave a clear and informative presentation of how the system works.
There was a thorough demonstration on how the system works on deployment
or mission areas. The system is web based; information can be loaded offline
then be up loaded when system is back online."
He said more or less the same about the presentation on behalf of Specsoft. In the report,
Mr Mokoena again high lighted the difference in cost between what is offered by the
two bidders: some R119 million by the applicant and some R348 million by Specsoft.
Mr Mokoena then offers the following observation in conclusion: "Both
companies/bidders gave clear presentation respectively in responding to the issues to be
clarified or addressed." He therefore records that all outstanding points were regarded
as having been clarified. He confirms that the soft copies of presentations of both
bidders were made available and given to representatives of no 2.
 Significantly, Mr Mokoena raises no reservations about any of the bids. More
significantly, Mr Mokoena is the deponent to the answering affidavit filed on behalf of
 On the same date, 24 October 2012, no 2 finalised a submission to no 3 under the
heading "re-submission on the recommendation of bid ... for the procurement of ...
National Codification System (NCS) with a five year maintenance period". This
"re-submission" is a lengthy affair again traversing the whole history of the bids and the
performance of the bidders and the clear superiority of the bid of the applicant, and also
dealing with the last Power Point presentation of 21 September 2012.
With regard to the original "five year argument" raised by no 3 when...